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Softbank plans to sue EY over its role in Wirecard scandal

City AM logo City AM 26/06/2020 Angharad Carrick
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Softbank is looking to sue EY over its role in the Wirecard scandal after investing in the embattled German firm last year.

The Japanese company is looking to file a complaint against the accounting firm after Wirecard collapsed on Thursday owing creditors nearly $4bn, according to German newspaper Der Spiegel.

Read more: FCA orders Wirecard to cease all regulated activities

Softbank has faced scrutiny over its investment in Wirecard in recent days after paying €900m for a 6 per cent stake in the firm last year. Even then there had been concerns about Wirecard’s accounting practices.

Last autumn the Japanese firm did a second deal with Wirecard and repackaged convertible bonds into exchangeables, according to CNBC.

On Thursday the embattled German firm filed for insolvency after it disclosed a €1.9bn financial hole in its accounts. Its chief executive Markus Braun was arrested earlier this week shortly after stepping down, as prosecutors investigate his role in misrepresenting the firm’s accounts.

Read more: Wirecard files for insolvency after disclosing €1.9bn financial hole

Softbank has come under fire in recent months over a series of bad bets through its Vision Fund, including Wework. The fund’s dismal performance led to job cuts earlier this month, with 15 per cent of staff laid off.

Wirecard’s problems arose last October after the Financial Times reported that employees had appeared to have conspired to fraudulently inflate numbers at the firm’s subsidiaries in Dubai. In April KPMG concluded it could not verify whether the “lion’s share” of profits reported between 2016 and 2018 were genuine, after a special audit.

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